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SECOND AMENDMENT TO LEASE AND CONCESSION AGREEMENT
THIS SECOND AMENDMENT to Lease and Concession Agreement (this “Second
Amendment”) is made this ___ day of _______________, 2018 by and between the PORT OF
SEATTLE, a Washington municipal corporation (“Port”) and ATZ INC., a Washington
corporation (“Lessee”).
R E C I T A L S
WHEREAS, the Port and Lessee entered into a Lease and Concession Agreement dated
July 30, 2013 (the “Agreement”) covering Lessee’s occupancy of certain described Premises at
Seattle-Tacoma International Airport for the operation of a paid public parking lot for
automobiles and other related activities;
WHEREAS, the Port and Lessee entered into that certain First Amendment to Lease and
Concession Agreement on June 11, 2015 (the “First Amendment”);
WHEREAS, Section 3.2 of the Agreement and Section 6 of the First Amendment contain
provisions regarding two possible extensions of the term of the Agreement for five (5) years
each;
WHEREAS, Lessee has expressed its desire to extend the term of the Agreement,
proposed revised financial terms for such extension term and proposed other revisions to the
Agreement; and
WHEREAS, the Port and Lessee have negotiated in good faith and reached mutually
agreeable terms for the extension of the term of the Agreement and other revisions to the
Agreement.
NOW, THEREFORE, in consideration of their mutual promises, the parties agree as follows:
1. Capitalized Terms. Unless otherwise defined herein, capitalized terms used in
this Second Amendment shall have the meanings given to them in the Agreement and First
Amendment.
2. Effective Date. The effective date of this Second Amendment shall be 12:00 am,
July 1, 2019 (the “Effective Date”), except that the provisions with respect to the Marketing Cost
Exclusion shall be effective as of January 1, 2019, as provided in Section 7 below.
3. Extension Term and Option Periods.
a. Extension Term. Unless terminated earlier pursuant to the terms of the
Agreement, as amended by this Second Amendment, effective as of the Effective Date, the term
of the Agreement is hereby extended for three (3) years (the “Extension Term”), such that the
Extension Term expires at 11:59:59 p.m. on June 30, 2022.
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b. Option Years. Provided Lessee is and remains in full compliance with the
terms and conditions of this Agreement, Lessee shall have the option to extend the Extension
Term for two (2) additional consecutive one (1) year terms, referred to herein, respectively, as
the “First Option Year” and the “Second Option Year.” The term of this Agreement shall
automatically extend for the First Option Year unless Lessee provides written notice to the Port
at least one hundred fifty (150) days prior to expiration of the Extension Term that Lessee
declines the First Option Year, in which event the term of this Agreement shall expire upon
expiration of the Extension Term. The term of this Agreement shall automatically extend for the
Second Option Year unless Lessee provides written notice to the Port at least one hundred fifty
(150) days prior to expiration of the First Option Term that Lessee declines the Second Option
Year, in which event the term of this Agreement shall expire upon expiration of First Option
Year. The First Option Year and the Second Option Year are from time to time referred to
herein each as an “Option Year” and, collectively, as the “Option Years.”
c. Section 3.2 of the Agreement and Section 6 of the First Amendment are
each deleted in their entirety.
4. Minimum Annual Guarantee. Beginning on the Effective Date, the Minimum
Annual Guarantee for each Agreement Year of the Extension Term and, unless declined by
Lessee pursuant to Section 3.b above, the Option Years, shall be as follows:
Agreement Year
Minimum Annual Guarantee
First Year of Extension Term
$2,000,000
Second Year of Extension Term
$2,000,000
Third Year of Extension Term
$2,000,000
First Option Year
$1,500,000
Second Option Year
$1,500,000
5. Percentage Fees. Beginning on the Effective Date, the Percentage Fee on Gross
Receipts from Parking, for each Agreement Year of the Extension Term and, unless declined by
Lessee pursuant to Section 3.b above, the Option Years, shall be as follows:
Agreement Year
Percentage Fee on Gross Receipts
from Parking
First Year of Extension Term
58%
Second Year of Extension Term
58%
Third Year of Extension Term
58%
First Option Year
57%
Second Option Year
56%
6. Agreement Year. Section 1.2 of the Agreement is deleted and replaced in its
entirety, as follows:
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1.2 Agreement Year. As used this Agreement, the term “Agreement Year”
means each successive year during the term of this Agreement, beginning on July 1, 2019
through the Extension Term and, as applicable, each Option Year.
7. Exclusion from Gross Receipts. Effective as of January 1, 2019, a new Section
4.3 is added to the Agreement, as follows:
4.3 Marketing Cost Exclusion. Subject to the procedures and Port approvals
described in this Section 4.3, Lessee may exclude from the calculation of Gross Receipts
from Parking, up to a maximum of $120,000 per Lessee Advertising Year (as defined
below), an amount equal to Lessee’s actual out-of-pocket expenditures paid to third
parties for print, radio, television, and internet and other digital advertising and associated
marketing efforts (“Marketing Costs”) specifically designed and targeted to maximize
Gross Receipts from Parking (the “Marketing Cost Exclusion”).
4.3.1 Lessee Advertising Year. As used in this Section 4.3, the term
“Lessee Advertising Year” shall mean each successive year during the term of this
Agreement, beginning on January 1, 2019, through the Extension Term and, if applicable,
each Option Year.
4.3.2 Marketing Plan Submittal. On or before January 15, 2019, and
thereafter at least 45 days prior to beginning of each successive Lessee Advertising Year,
Lessee shall provide the Port with Lessee’s annual marketing plan (the “Annual
Marketing Plan”) which shall describe Lessee’s overall marketing strategy for the Lessee
Advertising Year, a comprehensive marketing schedule detailing monthly advertising
medium and marketing activities, the budgeted Marketing Costs for each medium/activity
by month, and the metrics to be utilized to determine the success of each medium/activity
towards increasing Gross Receipts from Parking. Subject to the other conditions set forth
in this Section 4.3, no Marketing Cost Exclusion will be permitted or applicable unless
the Port approves the Annual Marketing Plan.
4.3.3 Monthly Reporting. Throughout each Lessee Advertising Year,
Lessee shall include in its monthly concession reports to the Port a detailed accounting of
Marketing Costs paid in the previous month, payment receipts for such Marketing Costs,
the portion of the Marketing Cost Exclusion to be applied for that month based on such
Marketing Cost expenditures, and a report summarizing the metrics demonstrating the
success (or lack of success) of each marketing activity/medium.
4.3.4 Briefing to the Port. Within thirty (30) days following the first
eight (8) months of each Lessee Advertising Year, Lessee shall provide a briefing to
appropriate Port staff summarizing Lessee’s execution of the Annual Marketing Plan, for
each medium/activity, and the specific financial results attributable to the Annual
Marketing Plan, including any demonstrable increase in Gross Receipts from Parking
resulting from Lessee’s expenditure of the Marketing Cost Exclusion funds. The Port
shall have the right to request additional briefings as it deems necessary.
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4.3.5 Port Determination re Continuance of the Exclusion. On an annual
basis, the Port will evaluate the success of the Annual Marketing Plan and Lessee’s
Marketing Cost expenditures, including expenditure of the Marketing Cost Exclusion
funds. Within thirty (30) days following Lessee’s briefing to the Port pursuant to Section
4.3.4, based on its evaluation, the Port will determine, in its sole and absolute discretion
(i) whether Lessee’s expenditure of the Marketing Cost Exclusion funds, specifically,
have resulted in a demonstrable increase in Gross Receipts from Parking and (ii) whether
the Marketing Cost Exclusion will continue for the subsequent Lessee Advertising Year.
If the Port determines that the Marketing Cost Exclusion should be continued, the Port
reserves the right, in its sole and absolute discretion, to decrease the amount of the
maximum Marketing Cost Exclusion for the subsequent Lessee Advertising Year based
on the Port’s evaluation of the Annual Marketing Plan, Lessee’s proposed Marketing
Cost expenditures, and whether Lessee’s expenditure of the Marketing Cost Exclusion
funds have resulted in a demonstrable increase in Gross Receipts from Parking. The Port
shall provide Lessee with written notice of whether the Marketing Cost Exclusion will
continue, discontinue or be reduced; if the Port notifies Lessee that the Marketing Cost
Exclusion shall discontinue, the Marketing Cost Exclusion will, effective upon the
commencement of the next Lessee Advertising Year, no longer be applicable under this
Agreement.
4.3.6 Partial Lessee Advertising Year. For any partial Lessee
Advertising Year, including at the end of the term (or due to earlier termination) of this
Agreement, the amount of any Marketing Cost Exclusion approved by the Port shall be
adjusted pro rata.
8. Early Termination by the Port. Section 30.2 of the Agreement is deleted in its
entirety and replaced with the following:
30.2 In the event the Port requires the Premises for a capital improvement of
the Airport (including, without limitation, any project relating to implementation of the
Sustainable Airport Master Plan), or for safety or security reasons, the Port may terminate
this Agreement by delivering not less than four (4) months advance written notice to
Lessee pursuant to this provision.
9. Lessee Winding Down Period.
a. In the event the Port invokes its early termination right under Section 30.2
of the Agreement, then during the final four (4) months prior to termination of the Agreement
(the “Lessee Winding Down Period”), the following terms shall apply:
(1) Lessee shall commence winding down of its operations at the Premises to
ensure timely surrender the Premises pursuant to Section 32 of the
Agreement;
(2) The Minimum Annual Guarantee shall not apply during the four (4)
months comprising the Lessee Winding Down Period; and
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(3) The Percentage Fee on Gross Receipts from Parking shall be 45%, 30%,
10%, and 10%, respectively, for each of the four (4) months comprising
the Lessee Winding Down Period.
b. Further, during the last four (4) months of the Extension Term (if Lessee
timely provides notice that it declines the First Option Year); or during the last four (4) months
of the First Option Year (if Lessee timely provides notice that it declines the Second Option
Year); or during the last four (4) months of the Second Option Year, such 4-month period, as
applicable, shall also be deemed a “Lessee Winding Down Period,” and during such period the
provisions of Section 9.a.(1) through (3) above shall apply.
10. Access Disruption Event. The following provisions shall apply in the event of an
Access Disruption Event (as defined below):
a. As used herein, an “Access Disruption Event” shall mean the occurrence
of ten (10) Ramp Closure Days in any thirty (30) day period. “Ramp Closure Day” shall mean
any 24 hour day (midnight to midnight) during which Lessee’s shuttle buses or customers are
unable to utilize (i) the on-ramp to southbound Airport Expressway from Air Cargo Road or (ii)
the off-ramp from southbound on the North Airport Expressway to South 170th Street (each a
“Ramp”) for more than ten (10) hours in such 24-hour day as a result of a closure or obstruction
of the Ramp, excluding any unplanned closures or obstructions, including those due to traffic
accidents, malfunctioning traffic signals, storm drain backup, broken water mains or similar
fortuitous events requiring repair, emergency response or otherwise resulting in obstruction of
the Ramp or access thereto.
b. Lessee shall be responsible for documenting any such Ramp Closure
Days. If Lessee determines that five (5) Ramp Closure Days have occurred within a 30-day
period, Lessee shall provide the Port written notice and documentation thereof, for the Port to
verify. If thereafter Lessee believes that an additional five (5) Ramp Closure Days have occurred
within such 30-day period, such that an Access Disruption Event has occurred, Lessee shall
promptly provide the Port with written notice and documentation thereof. If the Port concurs
that an Access Disruption Event has occurred, it will provide written notice to Lessee verifying
same. For avoidance of doubt, as referenced herein, the applicable 30-day period shall be
calculated commencing on the date of the first Ramp Closure Day of the five (5) Ramp Closure
Dates reported by Lessee to the Port and ending on the date 30 days thereafter; if less than ten
(10) Ramp Closure Days occur within said 30-day period such 30-day period will expire, and the
next 30-day period, if any, shall commence and be calculated as of the date that a subsequent
Ramp Closure Day occurs
c. Upon mutual verification that an Access Disruption Event has occurred,
Lessee and the Port will promptly begin negotiations for relief or mitigation during the
subsequent one hundred twenty (120) day period commencing on the date of the Port’s
verification notice. During this 120-day negotiation period, the Minimum Annual Guarantee
shall be suspended, and the Percentage Fee on Gross Receipts from Parking shall be reduced by
fifty percent (50%) from its then applicable rate.
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d. If the Port and Lessee have not executed an amendment to the Agreement
addressing the Access Disruption Event to the satisfaction of both parties prior to expiration of
said 120-day negotiation period, then the Agreement shall automatically terminate on the last day
of the third full calendar month following expiration of the 120-day negotiation period, and
during this final 3-month period, the Minimum Annual Guarantee shall not apply and the
Percentage Fee on Gross Receipts from Parking shall be 30%, 10%, and 10%, respectively, for
each of the final 3 months
11. No Further Amendment. Except as amended by this Second Amendment, all
other terms, covenants and conditions of the Agreement shall remain in full force and effect.
12. Counterparts. This Second Amendment may be executed in one or more
counterparts and all such counterparts shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the
day and year first set forth above.
Port:
PORT OF SEATTLE
a Washington municipal corporation
By:
__________________
Its:
__________________
By: Darin Lang
Its: President
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STATE OF _______________ )
) ss.
COUNTY OF _____________ )
I certify that I know or have satisfactory evidence that DARIN LANG is the person who
appeared before me, and said person acknowledged that (he/she) signed this instrument, on oath
stated that (he/she) was authorized to execute the instrument and acknowledged it as the
President of the ATZ, INC., a corporation of the State of Washington, to be the free and
voluntary act of such party for the uses and purposes mentioned in the instrument.
SUBSCRIBED AND SWORN to before me this _____ day of _________________, 20___.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day
and year first above written.
________________________________________
Notary Public in and for the State of ________________,
residing at ________________________________
My Commission Expires: ____________________
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that ______________________ is the person
who appeared before me, and said person acknowledged that (he/she) signed this instrument, on
oath stated that (he/she) was authorized to execute the instrument and acknowledged it as the
_________________________ of the PORT OF SEATTLE, a municipal corporation, to be the
free and voluntary act of such party for the uses and purposes mentioned in the instrument.
SUBSCRIBED AND SWORN to before me this _____ day of _________________, 20___.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day
and year first above written.
________________________________________
Notary Public in and for the State of Washington, residing
at ________________________________
My Commission Expires: ____________________